TRENDS IN THE TRAVEL CATERING INDUSTRY: A Survey Report

TRENDS IN THE TRAVEL CATERING INDUSTRY: A Survey Report The Travel Catering Research Centre (TCRC) Novie Johan and Prof. Peter Jones

Table of Contents Preface Executive Summary... I. Introduction The Survey. The Respondents The Report.. II. Findings and Discussion A. Major External Issues. Level of Concern a. Analysis by Sectors b. Significant Differences between Sectors... c. Analysis by Regions... d. Significant Differences between Regions... Level of Impact.. a. Analysis by Sectors b. Significant Differences between Sectors... c. Analysis by Regions... d. Significant Differences between Regions... Timing of Impact... a. Analysis by Sectors b. Analysis by Regions... B. Major Industry Trends. Level of Involvement. a. Analysis by Sectors b. Significant Differences between Sectors... c. Analysis by Regions... d. Significant Differences between Regions... Level of Impact.. a. Analysis by Sectors b. Significant Differences between Sectors... c. Analysis by Regions... d. Significant Differences between Regions... Timing of Impact... a. Analysis by Sectors b. Analysis by Regions... III. Demographic Data. IV. Conclusion... Appendices. I. Demographic Profile... II. Major External Issues III. Major Industry Trends. Page iv v 6 7 8 9 0 6 7 8 6 9 0 i i

List of Tables and Figures List of Tables Table. The Top Three and Lowest Two Rankings on External Issues of Level of Concern by Sectors... Table. The Top Three and Lowest Two Rankings on External Issues of Level of Concern by Regions.. Table. The Top Three and Lowest Two Rankings on External Issues of Level of Impacts by Sectors... Table. The Top Three and Lowest Two Rankings on External Issues of Level of Impacts by Regions.. Table. The Top Three and Lowest Two Rankings on Industry Trends of Level of Involvement by Sectors... Table 6. The Top Three and Lowest Two Rankings on Industry Trends of Level of Involvement by Regions Table 7. The Top Three and Lowest Two Rankings on Industry Trends of Level of Impacts by Sectors... Table 8. The Top Three and Lowest Two Rankings on Industry Trends of Level of Impacts by Regions.. Page 6 9 7 9 ii

List of Figures Figure. Sectors Representation of the Respondents Figure. Office Location of the Respondents... Figure. Overall Level of Concern with External Issues.. Figure. Climate Change by Level of Concern Figure. Terrorists attacks in major cities by Level of Concern... Figure 6. Increased passenger security measures by Level of Concern. Figure 7. Avian flu by Level of Concerns.. Figure 8. Human flu by Level of Concerns Figure 9. Overall Level of Impact of External Issues Figure 0. Climate Change by Level of Impacts... Figure. Higher taxation on air travel by Level of Impacts Figure. Increased passenger security measures by Level of Impacts Figure. Increased passenger security measures by Level of Impacts Figure. Avian flu by Level of Impacts... Figure. Human flu by Level of Impacts. Figure 6. Overall Timing. Figure 7. Overall Level of Involvement with Industry Trends Figure 8. Increased competition in the airline industry by Level of Involvement... Figure 9. Increased security management by Level of Involvement... Figure 0. Outsourcing of food production by Level of Involvement... Figure. Outsourcing of catering logistics function by Level of Involvement... Figure. Increase use of internet based Information Technology by Level of Involvement.. Figure. Increase in single seat class airlines by Level of Involvement. Figure. Increased branded food products on tray sets by Level of Involvement.. Figure. Reduction in packaging by Level of Involvement Figure 6. Increased concern on food safety and health by Level of Involvement... Figure 7. Increased security management by Level of Involvements.. Figure 8. Increase in single seat class airlines by Level of Involvements... Figure 9. Introduction of A80 by Level of Involvements.. Figure 0. Overall Level of Impact of Industry Trends. Figure. Increased competition in the airline industry by Level of Impacts.. Figure. Increased security management by Level of Impacts... Figure. Outsourcing of food production by Level of Impacts.. Figure. Increased role of distributors by Level of Impacts... Figure. Increased branded food products on tray sets by Level of Impacts.. Figure 6. Increased concerns on food safety and health by Level of Impacts. Figure 7. Introduction of A80 by Level of Impacts... Figure 8. Overall Timing. Page 6 7 8 8 0 0 6 8 8 9 9 0 0 7 7 7 8 8 9 iii

Preface It is not necessarily the case that the people that are best able to forecast what the future holds for an industry are the people working in that industry. Nonetheless insiders usually do have a very good idea as the key issues and trends that are affecting their organisations. The purpose of this research study was to investigate what people in the travel catering industry thought were their key issues and trends. As well as identifying the overall trends, this report also investigates the extent to which different stakeholder groups within the industry operators, caterers, and suppliers share the same perceptions as to the challenges facing them. Not surprisingly, it turns out there are some significant differences between them. The report also tries to identify how perceptions of these trends vary by region, principally between Europe, North America and Asia-Pacific. Given the significant structural differences between these three parts of world, the results suggest there are relatively few differences of opinion. It is planned that this will be the first of an annual trends survey for the travel catering industry. This means that over time, as well as providing a snap shot of industry opinion each year, it will be possible to map the way in which the industry is changing and the key trends affecting it. If you would like to take part in future surveys, please email Novie Johan, ITCA Research Officer (n.johan@surrey.ac.uk). It is easy to complete since it is an online survey on the internet, conducted in March each year. Prof. Peter Jones ITCA Chair Production and Operations Management and Novie Johan ITCA Research Officer Travel Catering Research Centre University of Surrey iv

Executive Summary This report provides an overview of practitioners opinions on seven external issues and industry trends affecting the travel catering industry, drawing on data from a survey conducted at the ITCA Trade Show and Conference in Cologne, Germany March 7-9 th, 007. The respondents represent the four major sectors of the industry from around the world, allowing evaluation of their responses on both a sectoral and regional basis. Major External Issues Hike in oil price is the issue of the overall highest concern within the industry (.66), while human flu is the issue of the overall least concern (.97). Corresponding to their level of concern, hike in oil price (.6) is perceived to have the most impact on the industry s business performance. The issue with the perceived least impact on the industry is climate change (.8). Some similarities are identified for both climate change and increased passenger security measures across level of concern and impact. Airlines are not only more concerned about the two issues than suppliers, but also perceive more impact from these issues than food suppliers. Some significant differences are also identified. Although there is a significant difference between food supplier and other sectors in the level of concern on terrorists attacks in major cities, there are no differences in s of level of impact. Whereas a significant difference is identified between non-food suppliers and airlines on higher taxation on air travel, no difference is identified on their level of concern. Major Industry Trends Increased competition in the airline industry (.6) is the issue of the overall highest concern, whereas adoption of RFID for equipment tracking (.) is the trend of the overall least concern. Corresponding to their level of involvement, increased competition in the airline industry (.6) is perceived to have the most impact on the industry s daily operations, while the adoption of RFID for equipment tracking (.) is perceived as having the overall lowest impact. Some similarities across level of concern and impact are identified for five trends: increased competition in the airline industry, increased security management, outsourcing of food production, increased branded food products on tray sets and increased concern on food safety and health. Significant differences are identified. Four trends show significant differences in the level of concern, but not on the level of impacts: outsourcing of catering logistics function, increase use of internet based IT, increase in single seat class airlines, and reduction in packaging. On the other hand, significant differences were noted on the perceived level o impact of the increased role of distributors, but not on the level of concern. v

TRENDS IN THE TRAVEL CATERING INDUSTRY SURVEY REPORT I. INTRODUCTION This report provides an overview of the opinions of practitioners within the travel catering industry on the external issues and industry trends affecting the industry. The Survey The data gathering in this study was done through a survey distributed at the ITCA Trade Show and Conference in Cologne, Germany March 7-9 th, 007. The survey consists of three sections: ) level of concern/involvements of external issues and industry trends, ) level of impacts of these external issues and industry trends, and ) timing of these impacts. In each of the following chapters, the findings from these three major parts will be discussed and analyzed. In the first section of the survey, the respondents were asked how concerned or involved they are with seven major external issues and industry trends affecting the travel catering industry, on a scale of (no concern/involvement) to (very great concern or involvement). The second section provides results on the responses in regards to the level of impacts they believe the following will have on the business performance of their company. In this section, the respondents were asked to measure the level of impacts on five point scale ranging from (no extent) to (very great extent). In the third section, the respondents were asked the timing they foresee of these external issues and industry trends in relation to their companies. The findings indicate whether the respondents believe that these issues are to take place (less than years) or (more than years). The Respondents Respondents were asked to indicate the sector of the travel catering industry their company represented: airlines, caterers, food suppliers or non-food suppliers. The purpose of this question was to ensure that all sectors were well-represented in the survey and to enable valid comparisons between sectors. As shown in Figure, all sectors are well represented with non-food suppliers as the largest sub-group. This may be explained by the fact that majority of the trade show exhibitors are non-food suppliers. Figure Sectors Representation of the Respondents Non-food Suppliers N= % Airlines N=9 % Suppliers N= % Caterers N= %

Figure illustrates the geographic profile of the respondents based on their current office location. This finding suggests that the respondents are diversely located in all continents around the world, although the majority of respondents are based on the office of Europe, followed by Asia Pacific and North America. This representation can be explained by the fact that the survey was conducted at the ITCA Trade Show and Conference in Germany. Figure. Office Location of the Respondents America N=7 % M iddle East and N= 9% Asia Pacific N= % Europe N=8 7% These two demographics data will be used in evaluating the results of the survey, in order to understand different perspectives from both sectors and regions. The Report The report consists of five parts: introduction, findings and discussion, conclusion, and demographic sections. In the finding and discussion section, the overall results are presented. The results of four sectors and four regions will be compared and contrasted; the difference and similarities among the sectors will be highlighted. Then, the top three and lowest two rankings on major external issues and industry trends will be discussed, followed by statistical analysis. Any issues or trends with significant statistical differences will be highlighted and figures will be depicted. A conclusion is provided. The final section describes the participants profile. In addition, supplementary figures are provided in the appendices.

II. FINDINGS AND DISCUSSION This section is divided into two main sub-sections as follows: Major External Issues. Major Industry Trends. There is a subsection of respondents level of concern, and then on the level of impacts of the trends, followed by the timing. Each of these is considered first from the overall perspective, then from a sectoral viewpoint and then from different regional responses. Seven major issues were researched: Climate change Terrorists attacks in major cities Hike in oil price Higher taxation on air travel Increased passenger security measures Avian flu Human flu. Level of Concern A. MAJOR EXTERNAL ISSUES Overall Figure. Overall Level of Concern with External Issues.99..66.8.0..97 Climate change (N=) Terrorists attacks in major cities (N=) Hike in oil price (N=) Higher taxation on air travel (N=) Increased passenger security measures (N=) Avian flu (N=) Human flu (N=) The overall result (Figure ) suggests that hike in oil price is the highest concern within the industry, with a mean of.66, followed by higher taxation on air travel (.8) and terrorists attacks in major cities (.). On the other hand, the survey respondents believe that a human flu is of least concern (.97), followed by climate change (.99).

Analysis by Sectors Table. The Top Three and Lowest Two Rankings on External Issues of Level of Concern by Sectors Sectors Top Three Rankings Lowest Two Rankings Overall. Hike in oil price (.66). Higher taxation on air travel (.8). Terrorists attacks in major cities (.). Human flu (.97). Climate change (.99) Airlines. Hike in oil price (.9). Increased passenger security measures (.76). Higher taxation on air travel (.6) Caterers. Hike in oil price (.6). Terrorists attacks in major cities (.8). Increased passenger security measures (.0) Suppliers Non Suppliers. Hike in oil price (.7). Higher taxation on air travel (.9). Avian flu (.77). a. Hike in oil price (.) b. Terrorists attacks in major cities (.). Higher taxation on air travel (.6). Avian flu (.08). Human flu (.8). a. Climate change (.7) b. Avian flu (.7). Avian flu (.0). Human flu (.06). Increased passenger security measures (.). Climate change (.7). Increased passenger security measures (.69). Climate change (.7) Top three rankings. As indicated in Table, all of the four industry sectors share the same opinions on the overall highest concern: hike in oil price (.66). For non food suppliers, this position is shared with terrorists attacks in major cities with the same mean score (.). Higher taxation on air travel (.8), which is ranked second by all respondents, is ranked second by both food (.9) and non food (.6) suppliers and third by airlines (.6). Interestingly, the issue does not appear to be of enough concern for caterers to be placed on the top three rankings. The issue of terrorists attacks in major cities (.) is indicated by overall respondents on the third place, and is ranked even higher by non-food suppliers (.) and caterers (.8). But, this issue is not listed in top three rankings by airlines and food suppliers. Lowest two rankings. Human flu, Avian flu, climate change and increased passenger security measures are the four issues identified as lowest two rankings by various sectors within the industry. In general, respondents are least concerned with human flu (.79), followed by climate change (.99). Human flu is also of least concern to airlines (.8), followed by Avian flu (.7) and climate change sharing the same position. Meanwhile, the reverse is true for caterers, with Avian flu (.0) as the least concern followed by human flu (.06). The two suppliers groups share the same views. Both sectors believe that increased passenger security measures (respectively. and.69 for food and non food suppliers) are the least issue of concern, followed by climate change (respectively.7 and.7). Review of general pattern. In general, airlines and caterers share roughly similar concern, and the two supplier groups do the same. Hike in oil price remains the most important issue across sectors. Increased passenger security measures appear to be a high concern to airlines and caterers, while higher taxation on air travel and avian flu appear so for the two suppliers. In s of the lowest two rankings, airlines and caterers have higher concern on the issues of both human and Avian flu s, while both

suppliers are more concern about increased passenger security measures and climate change. (See Appendices....) Significant Differences between Sectors Three external issues, as indicated in Figure -6, have significant statistical differences: climate change, terrorists attacks in major cities, and increased passenger security measures. The figures for the remainder factors are depicted in Appendices..6-... Figure Climate Change by Level of Concern.99.7.7.7.7 Overall Airlines Caterers Suppliers- Suppliers-Non Climate change. The statistical analysis (Sig.: 0.00) has shown that both suppliers (.7,.7) are significantly less concerned than airlines (.7) in regards to climate change. Figure Terrorists attacks in major cities by Level of Concern..8.8..6 Overall Airlines Caterers Suppliers- Suppliers-Non Terrorists attacks in major cities. A significant difference (Sig.: 0.007) is noted between the level of concern of food suppliers and the rest of the industry, suggesting that airlines (.8), caterers (.8) and non food suppliers (.) are far more concerned about terrorist attacks in major cities than food suppliers (.60).

Figure 6 Increased passenger security measures by Level of Concern.0.76...69 Overall Airlines Caterers Suppliers- Suppliers-Non Increased passenger security measures. The results suggest a significant difference (Sig.: 0.000) between food suppliers and caterers, in which the food (.0) and non food (.69) suppliers are significantly less concerned than airlines (.76) about increased passenger security measures. In addition, caterers (.0) are significantly more concerned about the issue than food suppliers (.0). Analysis by Regions All regions agree that hike in oil price is issue of the highest concern, with exceptions of Middle East and (.08) which put higher taxation on air travel as the highest issue of concern (Table ). In s of issues of least concern, the opinions are varied. Asia Pacific suggested it to be increased passenger security measures (.07); Europe opted for human flu (.9); America indicated climate change (.0), and finally Middle East and regarded it to be Avian flu (.). Table. The Top Three and Lowest Two Rankings on External Issues of Level of Concern by Regions Regions Top Three Rankings Lowest Two Rankings Overall. Hike in oil price (.66). Higher taxation on air travel (.8). Terrorists attacks in major cities (.). Human flu (.97). Climate change (.99) Asia Pacific. Hike in oil price (.87). Avian flu (.70). Terrorists attacks in major cities (.6) Europe. Hike in oil price (.6). Higher taxation on air travel (.0). Terrorists attacks in major cities (.8) America. Hike in oil price (.). Terrorists attacks in major cities (.). Higher taxation on air travel (.) Middle East &. Higher taxation on air travel (.08). Terrorists attacks in major cities (.9). Hike in oil price (.67). Increased passenger security measures (.07). Climate change (.). Human flu (.9). Avian flu (.78). Climate change (.0). Avian flu (.69). Avian flu (.). Increased passenger security measures (.6) Top three rankings. The overall top three rankings remain to be the main issues for each individual sector. Hike in oil price remains to be on top rank for Asia Pacific (.87), Europe (.6) and America (.), while it is positioned on the third rank for Middle East and (.67). Terrorists attack in major cities is on the second or third rank for all regions. Similarly, higher taxation on air travel is on either second or third rank 6

for all regions, with exceptions of Asia Pacific, where Avian flu (.70) has replaced the issue and Middle East and, where the issue is on the first position (.08). Lowest two rankings. The overall lowest two rankings have trivial representation among individual regions. Human flu (.9) is the lowest ranking for Europe, and climate change is noted for both Asia Pacific (.) and America (.0). On the other hand, Avian flu is a new issue that is well represented in three out of four regions: Europe (.78), America (.69), Middle East and (.), as an issue of less concern. Another issue considered to be less important is increased passenger security measures by Asia Pacific (.07) and Middle East and (.6). Review of general pattern. The top three rankings for different regions follow the pattern of the overall rankings, even though they are in no particular order. The only exception is Avian flu as indicated by Asia Pacific (.70), which is a new issue introduced on the top three rankings. There is no overall pattern for the two lowest rankings. The least concerns issues identified are climate change, human flu, Avian flu, and increased passenger security measures (See Appendices..-..6). Significant Differences between Regions Two external issues, as identified in Figures a..-a..6, are notified to have statistical significant differences: Avian flu and human flu. The remainder figures of issues are illustrated in Appendices..7-... Figure 7 Avian flu by Level of Concerns.0.70.78.88. Avian flu. A significant difference (Sig.:0.00) is noted, suggesting that Asia Pacific (.70) is significantly more concerned about Avian flu than Europe (.78) is. 7

Figure 8 Human flu by Level of Concerns.60.6.9.9.69 Human flu. The results indicate a statistical difference (Sig.: 0.000) suggesting that Europe (.9) is significantly less concerned than Asia Pacific (.60) and Middle East and (.6).. Level of Impact Overall Figure 9 Overall Level of Impact of External Issues.8.9.6..9.9.7 Climate change (N=9) Terrorists attacks in major cities (N=9) Hike in oil price (N=9) Higher taxation on air travel (N=8) Increased passenger security measures (N=0) Avian flu (N=9) Human flu (N=9) The respondents (Figure 9) suggest that hike in oil price (.6) has the most impact on their business performance, followed by terrorists attacks in major cities (.9) and higher taxation on air travel (.). In the contrary, they believe that climate change (.8) has the least impact on their daily operations, followed by increased passenger security measures (.9). 8

Analysis by Sectors Table. The Top Three and Lowest Two Rankings on External Issues of Level of Impact by Sectors Sectors Top Three Rankings Lowest Two Rankings Overall. Hike in oil price (.6). Terrorists attacks in major cities (.9). Higher taxation on air travel (.). Climate change (.8). Increased passenger security measures (.9) Airlines. Hike in oil price (). Higher taxation on air travel (.7). a. Increased passenger security measures (.7) b. Terrorists attacks in major cities (.7). Caterers. Terrorists attacks in major cities (.7). a. Hike in oil price (.) b. Human flu (.). a. Higher taxation on air travel (.0) b. Avian flu (.0) Suppliers Non Suppliers. Hike in oil price (.7). Terrorists attacks in major cities (.). a. Higher taxation on air travel (.) b. Human flu (.). Hike in oil price (.9). Terrorists attacks in major cities (.). Avian flu (.0). Human flu (.). Climate change (.). Climate change (.9). Increased passenger security measures (.). Increased passenger security measures (.6). Climate change (.8). Climate change (.). Increased passenger security measures (.) Top three rankings. The overall result of level of impact (Table ) suggests that hike in oil price (.6) has the most impact on the industry s business performance. Caterers are the only sector that does not share this opinion, positioning the issue on the second rank (.), sharing the position with human flu. Although the positions are reversed, the terrorists attacks in major cities and higher taxation on air travel remain to be the second and third top issues listed. Caterers ranked the issue first as the most impacting issues (.7). Other issues that are considered as top three rankings are increased passenger security measures (.7) by airlines, human flu by caterers (.) and food suppliers (.), and avian flu by caterers (.0) and non-food suppliers (.0). Lowest two rankings. Climate change (.8) and increased passenger security measures (.9) as the overall lowest two rankings are also rated as the lowest two by almost all sectors. Caterers and non food suppliers position the two issues in the same order, while food suppliers believe that increased passenger security measures is the least impacting issue (.6), followed by climate change (.8). Atypical to other sectors, airlines regard human flu (.) as the least impacting factor. Review of general pattern. In general, the top three issues and the lowest two issues are echoed by almost all sectors. A few exceptions applies as both the more impacting and less impacting issues, such as: Avian flu, human flu, and increased passenger security measures. The positioning by caterers is slightly different compare to other sectors, as they replace hike in oil price (.) with terrorists attacks in major cities (.7) as their top ranking. On the other hand, airlines are slightly different to others in which the sector places human flu (.) as the lowest issue (See Appendices....). 9

Significant Differences by Sectors Three external issues (Figures 0-) have statistical significant differences among sectors: climate change, higher taxation on air travel, and increased passenger security measures. The remainder figures of issues are illustrated in Appendices..6-... Figure 0 Climate Change by Level of Impacts..8.9.8. Overall Airlines Caterers Suppliers- Suppliers-Non Climate Change. A significant difference (Sig.: 0.00) is found between non-food suppliers (.) and airlines (.), with airlines identifying more impact from climate change than non-food suppliers. Figure Higher taxation on air travel by Level of Impacts..7.9..9 Overall Airlines Caterers Suppliers- Suppliers-Non Higher taxation on air travel. A significant difference (Sig.: 0.007) exists between nonfood suppliers (.90) and airlines (.7). This is not surprising. 0

Figure Increased passenger security measures by Level of Impacts.7.9..6. Overall Airlines Caterers Suppliers- Suppliers-Non Increased passenger security measures. Airlines (.7) perceive more impact than both food (.6) and non food suppliers (.), with statistical differences of 0.000, in this area. Analysis by Regions Table. The Top Three and Lowest Two Rankings on External Issues of Level of Impacts by Regions Regions Top Three Rankings Lowest Two Rankings Overall. Hike in oil price (.6). Terrorists attacks in major cities (.9). Higher taxation on air travel (.). Climate change (.8). Increased passenger security measures (.9) Asia Pacific. Avian flu (.87). Human flu (.8). Hike in oil price (.7) Europe. Hike in oil price (.8). Terrorists attacks in major cities (.). Higher taxation on air travel (.) America. Hike in oil price (.88). Terrorists attacks in major cities (.8). a. Higher taxation on air travel () b. Avian flu () Middle East &. Terrorists attacks in major cities (.8). a. Hike in oil price (.8) b. Increased passenger security measures (.8). Higher taxation on air travel (.). Climate change (.90). Higher taxation on air travel (.9). Increased passenger security measures (.70). Climate change (.76). a. Increased passenger security measures (.69) b. Climate change (.69). Human flu (.9). Avian flu (.8). Human flu (.8) Top three rankings. Different regions have different opinions in regards to the issues with the highest impacts (Table ). For their top ranking, Asia Pacific suggested Avian flu (.87) and human flu (.8), placing hike in oil price only on the third place. Other sectors remain with hike in oil price, e.g. Europe (.8) and America (.88), or terrorists attacks in major cities, e.g. Middle East and (.8). It worth noting that America ranks Avian flu () top third, sharing the position with higher taxation on air travel. Lowest two rankings. A few exceptions exist for the lowest two rankings. Europe and America have similar patterns to the overall lowest two issues: climate change and increased passenger security measures, with addition of human flu (.9) as the second least impacting issue for America. For Asia Pacific, climate change (.90) remains the least impacting issue, however is now followed by higher taxation on air travel (.9).

Unlike others, Middle East and suggested Avian flu (.8) and human flu (.8) as their lowest two issues. Review of general pattern. The top three rankings remain with the same pattern of the overall rankings, with a few exceptions considered as the most impacting issues by Asia Pacific (human flu and Avian flu ), America (Avian flu ), and Middle East and (increased passenger security measures). Similar is relevant to the lowest two rankings, with a few exceptions to the overall rankings: higher taxation on air travel (for Asia Pacific), human flu (for America), and Avian flu and human flu (for Middle East and ) (See Appendices..-..6). Significant Differences by Regions Three external issues (Figures ) are reported to have statistical significant differences in s of level of impacts: increased passenger security measures, Avian flu, and human flu. The figures for the remainder issues are illustrated in Appendices..7-... Analysis by Regions Figure Increased passenger security measures by Level of Impacts.9..70.69.8 Increased passenger security measures. Europe (.70) perceives less impact (Sig.: 0.00) from increased passenger security measures than Asia Pacific (.) does.

Figure Avian flu by Level of Impacts.87.8.0.00.8 Avian flu. In regards to the issue of Avian flu, Asia Pacific (.87) perceives more impact (Sig.: 0.00) than Europe (.0) and Middle East and (.8) do. Figure Human flu by Level of Impacts.8.6.00.9.8 Human flu. A significant difference (Sig.: 0.06) is noted between Europe () and Asia Pacific (.8), in which Europe perceives less impact from human flu than Asia Pacific does.

. Timing of Impacts Overall Figure 6 Overall Timing.0.9.8.7.6......0.6 Climate change (N=). Terrorists attacks in major cities (N=).6 Hike in oil price (N=0)... Higher taxation on air travel (N=0) Increased passenger security measures (N=) Avian flu (N=). Human flu (N=) The overall findings (Figure 6) suggest that only one of the seven external issues is to have impact on the industry: climate change (.6). The remainder of the issues are believed by the respondents to have immediate impacts within the next two years. The most immediate issue predicted to have impacts are terrorists attacks in major cities (.), followed by hike in oil price (.6). Analysis by Sectors Climate change is identified as the issue which will have impact in the, more than years or never, for all sectors. Caterers (68) and food suppliers (.68) foresee this in the very distant in the future, followed by non food suppliers (.6) and airlines (.6). In addition to climate change, human flu appears to be the second issue to have an impact in the distant future for non food suppliers (.) and airlines (.0). Terrorists attacks in major cities are predicted to have the most immediate impact within the next two years for the industry in general (.) Even though this issue is regarded by all of the four sectors to have immediate impacts, the timings predicted are different among sectors. Airlines believe that hike in oil price, higher taxation on air travel and increased passenger security measures are the issue with most immediate impacts to the industry, at means of.9. Interestingly, caterers (.8) and food (.) suppliers share the same opinions that terrorists attacks in major cities and avian flu are the most immediate impacts, sharing exact same means between the two issues. Whereas non-food suppliers believe that terrorists attacks in major cities will happen in a much nearer future (.9) (See Appendices..-..). Analysis by Regions Similar to findings by sector, only one of the external issues across regions is regarded to happen in the frame of years and more: climate change. The mean average for climate change varies between. to.7, with Middle East and believes it to happen more immediate and America more distant in the future. The remainders of the

external issues are deemed to happen in the, within less than years time. Asia Pacific believes that increased passenger security measures (.) and terrorists attacks (.7) to have most immediate impacts. For Europe, this will be the case for terrorists attacks in major cities (.) and hike in oil price (.7). Similar to Europe, Middle East and regards terrorist attacks (.7) to have the most immediate impact followed by two issues sharing a same mean (.0): hike in oil price and higher taxation on air travel. For America, the higher taxation on air travel (.) appears to have the most immediate impacts, followed by three issues of the same mean (.9): terrorists attacks in major cities, hike in oil price and increased passenger security measures (See Appendices.. to..).

B. MAJOR INDUSTRY TRENDS. Level of Involvement Fifteen major trends were researched: Increased competition in the airline industry Increased security management Outsourcing of food production Outsourcing of catering logistics function Increased role of distributors Increase use of internet based IT Increase in single seat class airlines Increased Retail Sales on Board (RSOB) Increased branded food products on tray sets Reduction in packaging Increased concerns on food safety and health Increase in recycling Growth in low cost airlines Adoption of RFID for equipment tracking Introduction of A80 Overall Figure 7 Overall Level of Involvement with Industry Trends Increased competition in the airline industry (N=) Increased security management (N=0) Outsourcing of food production (N=9) Outsourcing of catering logistics function. (N=0) Increased role of distributors (N=) Increase use of internet based Information Technology (e.g. e-business, etc.) (N=) Increase in single seat class airlines (N=0) Increased Retail Sales on Board (RSOB) (N=9) Increased branded food products on tray sets (N=0) Reduction in packaging (N=8) Increased concerns on food safety and health (N=9) Increase in recycling (N=0) Grow th in low cost airlines (N=) Adoption of RFID for equipment tracking (N=8) Introduction of A80 (N=9)...8.6.90.8.88.06.6.9.8.0.8..0.00.00.00.00.00 The overall result (Figure 7) suggests increased competition in the airline industry (.6) is the trend in which industry s most involved in, followed by increased concern on food safety and health (.8) and increase use of internet (.6). Respondents suggest adoption of RFID for equipment tracking (.) to be the trend with the least level of involvement, followed by introduction of A80 (.8). 6

Analysis by Sectors Table. The Top Three and Lowest Two Rankings on Industry Trends of Level of Involvement by Sectors Sectors Top Three Rankings Lowest Two Rankings Overall. Increased competition in the airline industry (.6). Increased concern on food safety and health (.8). Increase use of internet based Information Technology (e.g. e- business, etc.) (.6). Adoption of RFID for equipment tracking (.). Introduction of A80 (.8) Airlines Caterers Suppliers Non Suppliers. Increased competition in the airline industry (.0).. Increase use of internet based Information Technology (.8). Increased concern on food safety and health (.68). Increased concern on food safety and health (.9). Increase use of internet based Information Technology (.6).. Increased competition in the airline industry (.).. Increased concern on food safety and health (.7). Reduction in packaging (.0). Increase in recycling (.0). Increased competition in the airline industry (.). Increase use of IT within the industry (.). Growth in low cost airlines (.0). Introduction of A80 (.).. Increase in single seat class airlines (.). Adoption of RFID for equipment tracking (.9). Introduction of A80 (.7). Introduction of A80 (.87). Adoption of RFID for equipment tracking (.07). Outsourcing of food production (.8). Increase in single seat class airlines (.0) Top three rankings. Increased competition in the airline industry (.6), increased concern on food safety and health (.8), and increase use of internet based IT (.6) are the top three rankings across sectors (Table ). The same concerns were expressed by majority of sectors. Airlines and caterers fully agree to these issues, even though they are not in the exact order. suppliers introduced new issues of involvement at their second and third rank: reduction in packaging (.0) and increase in recycling (.0), following increased concern on food safety and health (.7). In the case of non food suppliers, they suggested growth in low cost airlines (.0) on the third rank, following increased competition (.) and increase use of internet (.). Lowest two rankings. Adoption of RFID for equipment tracking (.) and introduction of A80 (.8) are the overall lowest two rankings. Caterers follow this pattern, while food suppliers follow them in reverse. However, non food suppliers introduce other trends: outsourcing of food production (.8) and increase in single seat class airlines (.0). While airlines places introduction of A80 (.) as its first concern, it also introduces another trend: increase in single seat class airlines (.). Review of general patterns. Airlines and caterers are more involved in the same issues as identified by overall participants, whereas the suppliers group only share a few of them and introduce other trends which they are involved in: reduction in packaging (.0), increase in recycling (.0), and growth in low cost airlines (.0). Similarly, in s of 7

the lowest two rankings, caterers and food suppliers are least involved in the same issues as identified by the respondents. However, airlines and non-food suppliers introduce other trends of involvement: increase in single seat class airlines (respectively. and.0) and outsourcing of food production (.8 for non-food supplier) (See Appendices..-..). Significant Differences between Sectors Nine out of industry trends are identified (Figures 8-6) to have statistical significant differences in s of level of involvement. These trends will be discussed, and illustrated with figures. The figures for the remaining trends are illustrated in Appendices..6-..0. Figure 8 Increased competition in the airline industry by Level of Involvement.6.0..97. Overall Airlines Caterers Suppliers- Suppliers-Non Increased competition in the airline industry. The result suggests a significant difference between airlines and suppliers (Sig.: 0.00), in which airlines (.0) are significantly more involved in the increased competition in the airline industry than food (.97) and non food (.) suppliers are. Figure 9 Increased security management by Level of Involvement.66..9.. Overall Airlines Caterers Suppliers- Suppliers-Non Increased security management. Both airlines (.66) and caterers (.0) are significantly more involved than food (.) and non food (.) suppliers in the issue of increased security management (Sig.: 0.000). 8

Figure 0 Outsourcing of food production by Level of Involvement.8.9.8.9.8 Overall Airlines Caterers Suppliers- Suppliers-Non Outsourcing of food production. Non food suppliers (.8) are significantly less involved in the outsourcing of food production than other sectors: airlines (.9), caterers (.8) and food suppliers (. 9), with significance of 0.000. Figure Outsourcing of catering logistics function by Level of Involvement.88.9.9.97. Overall Airlines Caterers Suppliers- Suppliers-Non Outsourcing of catering logistics function. A significant difference is noted (Sig.: 0.00), suggesting that non food suppliers (.) are significantly less involved in the issue of outsourcing of catering logistics function compared to airlines (.9) and caterers (.9). 9

Figure Increase use of internet based Information Technology by Level of Involvement.6.8.6.87. Overall Airlines Caterers Suppliers- Suppliers-Non Increase use of internet based Information Technology. A significant difference (Sig.: 0.00) is identified between food suppliers (.87) and airlines (.8), in which airlines are more involved in the use of the internet. Figure Increase in single seat class airlines by Level of Involvement...7.9.0 Overall Airlines Caterers Suppliers- Suppliers-Non Increase in single seat class airlines. Non food suppliers (.0) are recorded to have a significantly lower involvement than caterers (.7) in the increase in single seat class airlines (Sig.: 0.0). 0

Figure Increased branded food products on tray sets by Level of Involvement.8.9.09.97.8 Overall Airlines Caterers Suppliers- Suppliers-Non Increased branded food products on tray sets. Non food suppliers (.8) are significantly less involved in the increased branded food products on tray sets than other sectors: airlines (.9), caterers (.09), and food suppliers (.97) (Sig.: 0.000). Figure Reduction in packaging by Level of Involvement.0.9.8..8 Overall Airlines Caterers Suppliers- Suppliers-Non Reduction in packaging. A statistical difference (Sig.: 0.000) exists for the issue of reduction in packaging, suggesting that non-food suppliers (.8) are significantly less involved than airlines (.9), caterers (.8), and food suppliers (.).

Figure 6 Increased concern on food safety and health by Level of Involvement.8.68.9.7.9 Overall Airlines Caterers Suppliers- Suppliers-Non Increased concern on food safety and health. Non-food suppliers (.9) are significantly less involved (Sig.: 0.000) in the increased concern of food safety and health than other sectors: airlines (.68), caterers (.9) and food suppliers (.70). Analysis by Regions Table 6. The Top Three and Lowest Two Rankings on Industry Trends of Level of Involvement by Regions Regions Top Three Rankings Lowest Two Rankings Overall. Increased competition in the airline industry (.6). Increased concerns on food safety and health (.8). Increase use of internet based Information Technology (e.g. e- business, etc.) (.6). Adoption of RFID for equipment tracking (.). Introduction of A80 (.8) Asia Pacific Europe America Middle East &. Increased competition in the airline industry (.6).. Increase use of internet based Information Technology (.6). Increased concerns on food safety and health (.8). Increased concerns on food safety and health (.). Increase in recycling (.). Increased competition in the airline industry.(.9). Increased competition in the airline industry (.88). a. Increased role of distributors (.) b. Increase use of internet based Information Technology (.). Outsourcing of catering logistics function (.). Increased competition in the airline industry (.09). Increased role of distributors (.). a. Increased security management (.) b. Increase use of internet based Information Technology (.). Adoption of RFID for equipment tracking (.6). Outsourcing of food production (.6). Introduction of A80 (.99).. Increase in single seat class airlines (.06). Adoption of RFID for equipment tracking (.). Introduction of A80 (.8). Outsourcing of food production (.). Adoption of RFID for equipment tracking (.)

Top three rankings. As depicted on table 6, Asia Pacific (.6), America (.88), and Middle East and (.09) agree with the overall top ranking that increased competition in the airline industry is an issue of major concern placing the issue on the first rank, while Europe place the issue on the third rank (.9). Increased concern on food safety and health is considered to be the most important issue for Europe (.), and is on the third place for Asia Pacific (.8). The increase use of internet is placed on the second rank by Asia Pacific (.6), America (.), and on third rank by Middle East and (.). Both America (.) and Middle East and (.) place increased role of distributors on the second rank. In addition, America is also concerned on the outsourcing of catering logistics function (.), while Middle East and place increased security management (.) on the third rank sharing with the use increase of internet. Lowest two rankings. Adoption of RFID for equipment tracking (.) and introduction of A80 (.8) are the industry trends in which overall participants are less involved in. America shares exactly the same issues of least involvement in that particular order. Meanwhile, Asia Pacific highlights their involvement on adoption of RFID for equipment tracking (.6) coupled with outsourcing of food production (.6). The same is true for Middle East and on the opposite order. For Europe, introduction of A80 (.99) is placed as the trend of least involvement, followed by increase in single seat class airlines (.06). Review of general patterns. Increased competition in the airline industry remains to be the top ranking for most regions, with exceptions of Europe. All regions share similar level of involvement with the overall trends, and adding a few new trends: increase in recycling (.), increase role of distributors (.), and increased security management (.). In s of the issue with the least involvement, adoption of RFID for equipment tracking and introduction of A80 remains to be the trends with least involvement for America. However, only adoption of RFID remains for both Asia Pacific and Middle East and, and only introduction of A80 remains for Europe. In addition, a new trend of involvement was introduced: outsourcing of food production (See Appendices..-..). Significant Differences between Regions The findings suggest that three out of industry trends (Figures 7-9) within different regions have statistical differences: increased security management, increase in single seat class airlines, and introduction of A80. Figures of these three industry trends are illustrated and explained below, whereas the remainder figures are depicted on Appendices..-..9.

Figure 7 Increased security management by Level of Involvements.9..8.6.8 Increased security management. The finding suggests that there is a significant difference (Sig.: 0.0), in which Europe is significantly less involved in the increased security management than Asia Pacific (.9). Figure 8 Increase in single seat class airlines by Level of Involvements..68.06.6.80 Increase in single seat class airlines. Europe (.06) is noted to have a significant level of less involvement in the increase in single seat class airlines than Asia Pacific (.68) (Sig.: 0.07). Figure 9 Introduction of A80 by Level of Involvements..00.99.8.00 Introduction of A80. Asia Pacific (.00) and Middle East and (.00) are significantly more involved than Europe (.99) in the introduction of A80 (Sig.: 0.000).

. Level of Impacts Overall Figure 0 Overall Level of Impact of Industry Trends Increased competition in the airline industry (N=8) Increased security management (N=7) Outsourcing of food production (N=6) Outsourcing of catering logistics function. (N=6) Increased role of distributors (N=7) Increase use of internet based Information Technology (e.g. e-business, etc.) (N=6) Increase in single seat class airlines (N=6) Increased Retail Sales on Board (RSOB) (N=6) Increased branded food products on tray sets (N=6) Reduction in packaging (N=) Increased concerns on food safety and health (N=) Increase in recycling (N=6) Grow th in low cost airlines (N=6) Adoption of RFID for equipment tracking (N=6) Introduction of A80 (N=7).8.9.0.7...0.78.96.7.....6 Figure 0 suggests that the industry is likely to receive the biggest impact from increased competition in the airline industry (.6), followed by increase use of internet (.) and growth in low cost airlines (.). The trend in which is believed to have the lowest impact on the industry is the adoption of RFID for equipment tracking (.), followed by introduction of A80 (.). Analysis by Sectors Table 7. The Top Three and Lowest Two Rankings on Industry Trends of Level of Impacts by Sectors Sectors Top Three Rankings Lowest Two Rankings Overall. Increased competition in the airline industry (.6). Increase use of internet based Information Technology (.). Growth in low cost airlines (.). Adoption of RFID for equipment tracking (.). Introduction of A80 (.) Airlines Caterers Suppliers Non Suppliers. Increased competition in the airline industry (.09). Increased concern on food safety and health (.6). Increase use of internet based Information Technology (e.g. e-business, etc.) (.9). Increased competition in the airline industry (.7). Increased concern on food safety and health (.6). Outsourcing of catering logistics function (.). Increased role of distributors (.7).. Outsourcing of food production (.8). Increased concern on food safety and health (.). Increased competition in the airline industry (.9). Growth in low cost airlines (.). Increase use of internet based Information Technology (.). Adoption of RFID for equipment tracking (.). Introduction of A80 (.9). Adoption of RFID for equipment tracking (.7). Increase in single seat class airlines (.79). Introduction of A80 (.). Increased security management (.).. Outsourcing of food production (.09). Adoption of RFID for equipment tracking (.6)

Top three rankings. Table 7 suggests that increased competition in the airline industry as an overall top ranking (.6) persists to be the top ranking across sectors, with exceptions of food suppliers which completely replacing the trend. Despite the fact that increase use of internet are placed second overall (.), the trend is only recognized by airlines (.9) and non food suppliers (.), both at the third rank. Growth in low cost airlines on analysis by sector is only recognized by non food suppliers (.) on the second rank. Whereas quite the opposite, the impact of increased concern on food safety and health is recognized by three out of four sectors: airlines (.6), caterers (.6) and food suppliers (.). Caterers highlighted the impact of outsourcing of catering logistics (.) on its daily performance by placing the issue on the third rank, while food suppliers highlight the impact of increased role of distributors (.7) and outsourcing of food production (.8) on the first and second ranks. Lowest two rankings. The impacts of adoption of RFID for equipment tracking (.) and introduction of A80 (.) are recognized by all participants in the industry. The least impacts of the two trends are also fully recognized by airlines industry. However, caterers and non food suppliers only enlist adoption of RFID for equipment tracking (respectively.7 and.6) and food suppliers only enlist introduction of A80 (.) as one of their least impacting trend. Increase in single seat class airlines (.79), increased security management (.), and outsourcing of food production (.09) are highlighted to be one of the least impacting trends, consecutively by caterers, food and non-food suppliers. Review of general patterns. In general, only a few of the top three rankings (e.g. increased competition in the airline industry and increase use of internet based IT), and lowest two rankings (e.g. adoption of RFID for equipment tracking and introduction of A80) are recognized by all sectors. Increased competition in the airline industry remains to be the overall and sectoral top rankings, with exception of food suppliers, in which increased role of distributors prevails. In s of the lowest two rankings, airlines is the only sector agreeing on the same set of trends, while the rest of the industry only identify one of the two overall least impacting trends. Consequently, new trends are identified within the rankings for different sectors (See Figures..-..). Significant Differences between Sectors The following are six industry trends (Figures -6), in which statistical differences were recognized in s of level of impacts by sectors. The remaining nine figures of industry trends are illustrated in Appendices..6-..0. 6